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Dumping the Economic Cover Stories

Karl Marx, in recounting the many horrors of the wretched conditions of 19th century British industrialism, sarcastically remarked, “Das ist der doux commerce!” Marx was critiquing the well-known idea that the rise of market economies had redirected human energies previously devoted to warfare into the more “gentle” (=doux) sphere of economic competition and acquisitiveness. The idea of le doux commerce was an idealized cover story. No one can doubt that rich barons trying to outdo one another in home furnishings is better than the battlefield. But the idea of economic competition as a systematic basis for a more peaceable society is far less compelling, once the whole picture of such a society is taken into account. The illusion of the cover story only survives if one ignores much of the picture.

Christianity is in many ways a faith that mercilessly exposes all of our cover stories. These cover stories are meant to comfort us, usually by telling us that our typical habits are commendable, or at least “not all that bad.” Sin is displaced onto a scapegoat, rather than being discovered and exposed in our own lives. Of course, Christianity can do this only insofar as it also preaches the always-greater power of God’s rich mercy. Christ crucified is the culmination of Jesus’ relentless truth-telling, while at the same time, is the promise of the greater power of perfect love. The prophetic Jesus and the forgiving Jesus are not Jekyll and Hyde, but instead are necessary complements for actual conversion and reconciliation. Without truth-telling, forgiveness is cheap or even unnecessary. Without forgiveness, truth-telling leads to despair or cynicism.

So it is disappointing that another idealized cover story for economic competition was recently forwarded, in the pages of the Wall Street Journal, by Cardinal Timothy Dolan: the idea of “virtuous capitalism.”

Cardinal Dolan (who has many gifts and has done much good for the Church) is writing to tamp down concerns about Pope Francis. He writes:

The church has long taught that the value of any economic system rests on the personal virtue of the individuals who take part in it, and on the morality of their day-to-day decisions. Business can be a noble vocation, so long as those engaged in it also serve the common good, acting with a sense of generosity in addition to self-interest.

In speaking to the U.N. leaders, Pope Francis recalled the story of Zacchaeus, in which Jesus inspires the repentant tax collector to make a radical decision to put his economic wealth at the service of others. This reminds us that a spirit of sharing and solidarity with others, in the words of Francis, "should be at the beginning and end of all political and economic activity."

In other words, virtuous people, acting justly, compassionately and honestly, are the foundation of good economic or business activity that can produce prosperity for all, and not just for a few.

In one sense, what the cardinal states here is unobjectionable. Many authors have recognized that markets themselves depend on a background “morality” of respect for the rule of law, especially a broad notion of trust. Contracts are enforceable by law, but it would be intolerably burdensome to market activity if such trust had to be constantly extracted by coercive means.

But the cardinal’s op-ed falls short in two notable ways. First, he implies that the present American system is mostly this kind of virtuous capitalism. He notes that

the church certainly disapproves of any system of unregulated economic amorality, which leaves people at the mercy of impersonal market forces, where they have no choice but to sink, swim or be left with the scraps that fall from the table. That kind of environment produces the evils of greed, envy, fraud, misuse of riches, gross luxury and exploitation of the poor and the laborer. Fortunately, few people subscribe to an inhumane philosophy of radical economic individualism, and even fewer consider the ‘Wolf of Wall Street’ to be a good role model.

He reminds his readers that a supposedly more vicious form of capitalism exists in less developed countries, and that the pope is addressing this audience. But does the cardinal seriously believe that American economic practice is not beset by “the evils of greed, envy, fraud, misuse of riches, gross luxury and exploitation of the poor and the laborer”? Where does he think the food and clothing at his neighborhood discount retailer come from? What advertisements is he seeing that do not play to our tendencies to envy and luxury? What parts of the mortgage crisis (or, to take another example, the 1980’s S&L crisis) aren’t traceable to acts classifiable as fraud? Cardinal Dolan’s editorial seeks to partition off the bad apples from the fundamentally beneficial system. In so doing, it seems clear he is relying on a cover story that cannot account for regular and pervasive features of exactly the economy he is discussing.

Secondly, in so doing, Cardinal Dolan display a kind of naivete about social structures, one which notably contrasts with the hypersuspicions bishops often apply to questions about sex and religious freedom. The difference is striking. In the latter cases, the bishops are (not wrongly) alert to every possible ramification of seemingly minor changes in practices. They are rightly aware that a contraceptive mentality and widespread abortion are not accidental features of a promiscuous culture, but are in fact regular and pervasive… and this despite the fact that the vast majority in the culture are not simply slaves to lust.

But here, regular and pervasive features of our economic system are attributed to the accidental actions of vicious businessmen or corrupt regulators. The cardinal seems to think that self-interest and generosity can somehow be combined, simply by individuals having the correct dispositions. This tension has beset capitalism from its earliest formulations, by the heirs of the Scottish Enlightenment philosophy that posited two basic sources for human behavior: self-interest and the “moral sense.” This combination has never been philosophically defensible, and the more dastardly in this line (Bernard Mandeville, David Hume) have more coherently admitted this. But why a cardinal of the Catholic Church picks up on this line of thought is mystifying. What the modern encyclical tradition has continuously suggested is instead a twin suspicion of both markets and states – what Benedict termed “the market-state binary” – in favor of economic forms of collaboration and cooperation that serve the common good. This vision surely requires agents with a different morality than that possessed by homo economicus, or his successor, the modern corporation. In this, Dolan is right. But such a vision also invites a quite different understanding of the kinds of structures and systems in which this goes on. The examples of this are constant: the support of cooperatives and various mutualist enterprises in the early 20th century, St. John Paul II’s insistence on truly humanizing work in Laborem Exercens, Pope Benedict’s claim that “quota of gratuitousness” must be present within the structures of business, not simply as a mop-up afterwards. Or in the stark words of Paul VI’s Populorum Progressio: “The world is sick.” One cannot have it both ways: believing the market is neutrally set up so that individuals simply act within it based on their respective “moralities,” but also seeing it as an effective incentive system driven by self-interest.

Let me be clear: I do not think that corporate CEO’s are all moral monsters. This is plainly false. But this is precisely the problem with using stories like “The Wolf of Wall Street” to exemplify the problem. The insidious nature of these structures of sin is that few are such monsters, and yet the system rolls along. Such cover stories can be used by the Left, as well. All such morality plays sustain the illusion that the problem is other bad people. In fact, the problem is our collective attachment to unjust and unsustainable systems on which we all too often rely for our daily bread.

In order to sustain his case, then, the cardinal has recourse to an illusory, partial vision of the existing economy, supported by a naïve, ultimately philosophically incoherent understanding of the relationship of individual morality and present economic structures. Put another way, he is telling us a story of the good Jimmy Stewart and the bad Lionel Barrymore, all the while ignoring that even Frank Capra’s fairy tale took place in a small town where George Bailey and Potter ran competing small financial enterprises.

New York City is no Bedford Falls. In Bedford Falls, the good cardinal might take his rich pastoral sensibilities, good humor, and enthusiasm down to Potter’s office, and try to soften his heart. But as the overseer sent by the Spirit to the see in which the world’s few vast financial powers congregate, Cardinal Dolan might want to rethink his story. By all means, remind us that pure top-down statist policies are not the way to salvation, any more than the unfettered invisible hand. But this is no middle way, as the cardinal suggests in his article, as a way of maintaining the basic cover story that things are fine in the US economy. It is a different way, a strange way, that surely calls the richest see in the richest society to reconsider its collective disobedience, its secret sins that we won’t admit. Gross luxury, envy, fraud, greed – these are on the cardinal’s doorstep (as are the poor). “Das ist der virtuous capitalism”…

Comments

It seems that Cardinal Dolan might do well to get out of his Madison ave. mansion, take some time out of hobnobbing with the rich at fancy hotels, and take a walk down the streets where the poor are in that great city that never sleeps.

Would this WSJ article by Cardinal Dolan have anything to do with an interview with Home Depot founder and devout Catholic, Ken Langone, last December? Langone said he told Dolan that Pope’s statements about capitalism have left many potential “capitalist benefactors” wary of donating to the Church or its fundraising projects.

According to Langone, an anonymous, “potential seven-figure donor” for the Church’s restoration of St. Patrick’s Cathedral is concerned about the Pope’s criticism of capitalism.

(N.B. If I am correct, the restoration of the Cathedral also includes the Cardinal's residence.)

Cardinal Dolan's article and Cardinal Rodriguez Maradiaga's keynote speech, referenced in the comments of another current post, make interesting side-by-side reading. Two different (but how different?) interpretations of Evangelii gaudium.

Good pick-up, Helen. We will never know but it is always a good idea to follow the money. Dolan has a degree in history but appears to be unable to use historical research approaches on various topics.

A certain priest blogger who goes by the first initial of his last name claims that

"Authors are divided about whether Zacchaeus was already giving half his wealth to the poor before the Lord came along or whether he made the decision in the Lord’s presence to give to the poor in the future."

Why this digression? Who knows? Can it be to show that Zacchaus was a generous man before he encountered Jesus and thus the story does not mandate such generosity of Christians.

Given C. Dolan's body language, I tend to think that he is a genuinely sociable man who would like everything to be hunky-dory for everyone. But he's a cardinal of the Catholic Church expounding on economic matters as if he doesn't understand the power (i.e. money) resting in the hands of the super-rich, and he doesn't seem to see the necessity of those capitalists doing what captitalists are called to do: invest their capital -- even in risky situations such as the current economy -- when the common good requires more jobs for the people. He must prod the capitalists and the politicians to invest and spend.

Virtue isn't simply wishing everyone well. Virtue is doing what needs doing, and then some. And in these circumstances, that means capitalists risking capital. He should know that by now. No, he mustn't tell them what to invest in -- that's for them, the experts, to judge. Just remind that that it is their duty to invest or the whole system could crash, including their own part.

But here, regular and pervasive features of our economic system are attributed to the accidental actions of vicious businessmen or corrupt regulators. The cardinal seems to think that self-interest and generosity can somehow be combined, simply by individuals having the correct dispositions.

Assuming that the "accidental actions" are those list of vices - greed, fraud, and the rest - then I would say the Cardinal is right. Those attributes are human attributes that precede any market arrangement and consequently have been found in all market arrangements in all places and times throughout history, not to mention in other areas of human activity such as education, religion, health care, government et al.

Cooperatives, mutual aid arrangements and so on are possible in the globalized, regulated free market arrangements that prevail. I would say that the popes are not wrong to call for them, but in the US, they are not the normative model (although they have existed and continue to exist). We're told that, in Germany, models of cooperation between capital and labor are more common, to the extent that Volkswagen recently supported a unionization drive at one of its assembly plants in the American South. In this American's opinion, that was extraordinary, and may be a real-life example of the sorts of things that popes call for. The drive failed nonetheless. Yet in the globalized, regulated free market conditions that prevail in the American labor market, Volkswagen in South Carolina still is free to pay its employees just wages, and to welcome workers into management decisions and governance activities.

This leads to a comment on the philisophical tension noted in the post: standard economic analysis would state that Volkswagen cooperates with employees unions, in line with what popes call for, because it is in its self-interest to do so. Indeed, economists don't reduce "self-interest" to greed and other vices, prevalent though those are in human nature and consequently in economic life. "Self-interest" means that business actors seek to maximize their utility, and "utility" is an umbrella term that encompasses the whole spectrum of human motives, from the vices such as greed and pride, to the virtues such as creativity (think of the Apple engineers and execs who derive satisfaction from creating cool, fun gadgets) to family flourishing (the countless small businesses that exist in large part to provide employment to extended families) to the fulfillment of vocations (businesses that are founded because the founder senses that this is what she is called to do).

This post, it seems to me, with its emphasis on the "regular and pervasive" ills and vices of contemporary economic life, comes pretty close to describing corporations and, at a larger level, our contemporary globalized, regulated free market, as structures of sin. Let's put it on the table that they are not, as a class, structures of sin. That is not to say that none of them harbor or encourage sinful behavior like greed or the exploitation of labor; we all know that these sins occur depressingly often. But the worlds of corporations and market life are too complex to hang a tag like "structures of sin"on them. There is a lot of virtuous living to be found in the marketplace. I am certain that when Cardinal Dolan wrote this WSJ piece, he had in the back of his mind the many generous, virtuous, even holy business persons with whom he comes in contact as archbishop of New York. Any theory of marketplace morality needs to be able to account for them; that, too, is an obligation of truth-telling.

I complain a great deal about the "capitalists", which, ISTM is a rather ambiguous term. In economics it refers to the owners of wealth of various sorts. expecially money. in ordinary, everyday use it connotes especially the super-rich with vasts amounts of money and non-productive means of obtaining money. The latter includes the financial segment of the population which in recent decades has used the money at their disposal (which mainly did NOT belong to them) to make huge amounts of money for themselves. These include the ones who invented the derivatives market, one which ended up destroying the wealth of many little people. They were called upon to make money for the lenders, but instead shafted the little lenders. That was sinful, sinful, sinful, sinful, no matter how you cut it.

I grant you there are good capitalists (anyone with retirement investments is a capitalist), good CEOs, other good management people. I've known some. But the laws of the land are such that the bad guys can do their economic dirt and not only get away with it, but can actually be bailed out when Congress deems it wise because the Congress has been bought by the super-rich. The corporate laws of this nation are not generally for the benefit of the common good. They favor the rich, and especially the super-rich. And the middle-class is finally catching on. (I hope.)

Jim P pushes exactly the right question. As I said in my post, I think many market participants are individually committed to fairness, generosity, etc. The further questions that must be pursued are two: (1) Can these virtues be active and leading in the market activity itself, or are they compartmentalized, in such a way that managerial decisions reflect a different moral calculus than their care for their children, their work in parishes, etc.? (2) Does the structure of the large corporation - and perhaps the large multinational corporation in particular - incline to sin and vice in a way that other structures do not? As explained in the papal documents, structures of sin are not pure "mechanism" that "force" people to sin - rather, they more or less tilt the moral playing field in a particular direction. Neither George Bailey nor Potter are large corporations! So Jim P is absolutely right that vices are not peculiar to this form? But does this form have a peculiar bias? My own inclination is to say that it does, and I think I will do another post to explain why...

This post, it seems to me, with its emphasis on the "regular and pervasive" ills and vices of contemporary economic life, comes pretty close to describing corporations and, at a larger level, our contemporary globalized, regulated free market, as structures of sin. Let's put it on the table that they are not, as a class, structures of sin.

Let's see if the table is big enough to hold this: They are not, as a class, structures of virtue, either. I have to insist on this because it seems that too often we are told that sin is the aberation, and virtue is the end toward which all corporate capitalism is tending. That leads to such fatuous commentary as the contention that poor Americans would seem rich "in a lotta other countries." And so we hear, too, that other countries' capitalism may be crony, but ours is not. But if we know that corprate capitalism can tend toward greed or toward the greatest good for the greatest number, why is it that anyone can cite numerous cases of the former, but you really have to slice your definitions thin to find any case of the latter? Today we may pray over the inability for years of General Motors to make a safe ignition switch.

And as a sort of P.S., I came to this post after reading Massimo Faggioli's piece elsewhere on the site. And, thinking about Cardinal Dolan tempering Pope Francis's varous criticisms of capitalism, I wish we had some bishops who are as enthusiastic about this pope as Catholic publishers, Catholic laity and agnostics are.

Can these virtues [such as fairness and generosity] be active and leading in the market activity itself, or are they compartmentalized, in such a way that managerial decisions reflect a different moral calculus than their care for their children, their work in parishes, etc.?

You're right that the "church on Sunday/work on Monday" syndrome is common. Yet I would say that, yes, those virtues can be active and leading in the marketplace- but there is certainly no guarantee that they will be. I take it from the Cardinal's article that it is dependent on managers and directors who are committed to fostering those virtues. I would agree that this is a necessary condition. I can think of three ways that managers and directors can be induced to foster these values:

As I noted in my previous comment, business leaders may perceive that it is in their self-interest to be fair, generous, just and so on. A reputation in the marketplace for fair dealing and ease of doing business is an asset; leaders recognize that happy employees (or at least minimally disgruntled employees) are more motivated to work hard and produce good qualilty work; and there are clear benefits to keeping the community and its political leaders happy. Thus, doing the right thing is also doing the shrewd thing.

Regulations imposed by governments and private groups such as bar associations provide a concrete incentive for business leaders to do the right thing (or, as is commonly the case, a concrete disincentive to do the wrong thing). Perhaps this is another variation on the maxim that doing the right thing is also doing the shrewd thing, assuming that (as is generally the case in the US), the regulatory regime is aligned with society's notions of justice and fairness.

The managers and directors are personally committed to the organizations they lead doing the right thing, not only because it is the shrewd thing, but also because it is the right thing. Here is where the possibility of personal Christian conversion comes into play in a direct fashion. Let me hasten to add that Christian conversion certainly isn't the only way that business leaders can be committed to doing the right thing for admirable and disinterested reasons, but the marketplace is a vast and fertile field for Christian witness and even evangelization.

On that last point, let me note that the holy order to which I happen to belong, the diaconate, is active in the workplace, witnessing to and encouraging ethical business behavior as being consistent with Christian mission. The same could be said for apostolates such as Opus Dei. And really, all the baptized who go into the marketplace have an opportunity and, arguably, a duty to witness in this way.

Ann - you make some good distinctions in your comment. Regarding the financial meltdown and resulting Great Recession: it was a catastrophe with many fathers, and maybe quite a few mothers, too. I don't think anybody actually set out intentionally to crash the world economy, but the confluence of sins and sinful tendencies, in many sectors and at many levels, with circumstances that virtually nobody understood or predicted in time, led to it. If I had to pick a character trait that topped all the others in leading to the crisis, it would be ignorance. If I'm not mistaken, that's one of the deadly sins. Having worked for a few years in the financial industry, I can report from personal experience that a lot of people who are in charge of a lot of other people's money would never be admitted to a MENSA meeting.

Warren’s book demonstrates that there are two worlds and two sets of rules (and welfare) in America; one for the wealthy and one for everybody else. As they suggest, trickle down theories of wealth distribution are little more than magical thinking, and they have led to increased economic inequality. It is time for a reality-based public discussion on how move to greater equality and shared prosperity, along with a look at the high cost of not doing so, morally, socially, politically, and economically.”

You say "virtually nobody understood" the circumstances that cause the recession. Well, Paul Krugman predicted the housing bubble but admitted that, like everyone else, he had no inkling of how bad the further consequences would be. He thinks that now the reasons for it are clear.

You say that one cause was ignorance, and that's partly true. But there is ignorance (invincible) and ignorance (vincible). Krugman says that since the bust the conservative economists are denying the truth of data that has emerged since the bust which explains it, and they're making decisions pro austerity that are exactly the opposite of what they should be deciding. Instead of sitting on their money, the private sector (which at the moment has a great deal of money) should be investing, and the government should be taxing and spending to produce more jobs.

And don't tell me that the conservative establishment is open to new data, just look at the conservative reception of Picketty's book -- most of them automatically condemned it. We have, I think, an *obligation* to look at new data and ideas when the old ones are palpably inadequate or downright wrong, and if necessary we have an obligation to revise our presuppositions.

In our country our essentially Puritan conservative thinking is that in bad times spending money is wasteful. According to that theology, bad times are times to be particularly virtuous, steadfast, i.e., to be very, very thrifty and make no more mistakes. I grant you that people should save money -- but in good times so they'll have it to invest and spend when times are bad. But for the Puritan economists recessions and depressions are times for being self-protective and letting that invisible hand (what a convenient superstition!) do its work.

That's terrible theology. God helps those who help themselves. He wants us to have enough courage to be optimistic, not pessimistic -- and then act. A recession is not a time to hunker down and essentially do nothing, waiting for His miracles to get us out of our economic hole. Rather, it's a time for the rich to risk some of their cash to stimulate the economy for the sake of the common good, and it's a time for the rich to pay more taxes so the government can spend it on large-scale projects, thus providing many jobs and kick-starting the economy.

(I might add that I'm not hurting in this bad economy. It's the irrationality of the conservatives that drives me up the wall. And I see so many good people suffering because there are no jobs for them, so their dreams are being destroyed.)

I always love reading about the supposed culprits of the financial crisis like all of us were just innocent bystanders. IMHO, we made a significant mental error, treating homes as though they were an investment rather than the consumption that they actually represent: shelter. We compounded that error with the erroneous belief that home prices would miraculously continue upward forever and then lied about our incomes on our mortgage applications to greedily bet on our views. We all did it to ourselves...

Bruce, Speak for yourself. I never thought that home prices would continue miraculously upward. I wrote that they couldn't keep going that way when they were only four or five times median income. I didn't lie about my income on mortgage applications. A lot of serious people, including the head of the Federal Reserve, were making that first mistake, and a lot of banks and mortgage companies headed by highly feted and continuously honored entrepreneurs were encouraging the second scam.

What happened was done to (most of) us by irresponsible greedheads. It is not a case of everyone was guilty so no one was guilty. Attorney General Eric Holder has decided we can't prosecute the greedheads who knowingly engaged in illegal activities with cockamamie financial instruments they didn't understand, but I don't agree with Eric Holder. So next time you are spreading the guilt, I want to be left out of it again.

One way to recapitulate this conversation is by focusing on the distinction between “Virtuous Capitalism” and “the virtuous Capitalist.” Of course, “virtue” is a squishy term. Aristotle discussed the “virtue” of a horse but not the “virtue” of economic activity, which he treated as the mundane means for achieving higher human ends.

The Puritans were the last generation of Americans who attempted to construct a “moral economy.” In response to that experiment, our ancestors turned to “free market” capitalism. (The despicable institution of slavery, however, has been a lingering cancer that has contaminated American capitalism from its beginnings.)

Markets, while requiring agreed upon rules for “fairness” in exchange and trade, do not require participants to be “virtuous.” Indeed the “hidden hand” is prized because winners and losers emerge without reference to their personal moral worthiness. To paraphrase Madison, since human beings are not angels, we have had to settle for “the market” as the least pernicious – and most efficient-- mechanism for allocating scarce resources.

The culture of capitalism assumes that human beings will generally seek “the best deal possible,” whether buying groceries, stocks and bonds, or a corporation. Further, individuals will generally be motivated to enhance their personal “well-being.” Even in a world where the individual’s quest for “the best deal possible”-- and improved “well-being”-- is constrained by standards of fairness and transparency, there will be losers—and unintended consequences. Capitalist competition inevitably generates “creative destruction”: products fail to sell, competitors are more creative, firms and individuals go bankrupt, workers and managers lose their jobs, families are disrupted.

David Cloutier’s reference to “A Wonderful Life” should draw our attention to the 21st century fate of small town banks, credit unions, and grocery stores. We consumers, looking for the “best deal possible,” are complicit in the inevitable “creative destruction” of “the local” and the market success of national and global corporations.

The Catholic Church has never been at ease with capitalism and its explicit enthronement of earthly acquisitiveness, self-interest, and competition. Seldom do Sunday sermons stress that, in the wake of Original Sin, competitive capitalism with its “creative destruction” represent God’s plan for the “fallen” human race. (Perhaps that is what Cardinal Dolan really intended to write!)

Facing the moral ambiguities embedded in capitalism—but being more afraid of socialism and communism—Church leaders waffle on whether the current economic system represents a “structure of sin.” Instead they focus on “virtuous capitalists.” Like generals engaged in a “just war,” capitalists are to be judged by their personal integrity and humanity—not the negative social consequences of their “professional decisions.”

Yes, "creative destruction" on principle is enough to give a preacher pause. But in the long run the community benefits by (theoretically) better and cheaper products. The problem is the displacement of the workers whose employers' businesses fail. They're out of work. But that is far from unsolvable -- even Hayek grants that in those circumstances are inevitable and that the government should provide a safety net for such workers in the interim when they have no work. (Hayek is a lot more liberal in some ways than the Tea Party wants to grant.)

To me the biggest theoretical and practical problem with capitalism is that there is no good criterion for determining a minimum fair wage. Leaving it up to the mythical invisible hand to solve the problem just has not worked.

a lot of banks and mortgage companies headed by highly feted and continuously honored entrepreneurs were encouraging the second scam,

Tom, last I checked, no one could force me to borrow money. I might be encouraged but I have to agree and sign on. Not everyone participated, but anyone who spent more because they thought their home was worth more was complicit.

Bruce, last I checked no one could force me to put on a shirt, but one goes along with convention unless one has reason to doubt the convention. With low, low, low rates advertised everywhere, it became conventional to use one's home as collateral. The folks on the cover of Business Week had leveraged their companies (which may have included the company you worked for); leverage was the L in LBO, and if it worked for the smart guys, why wouldn't it work for you? (Unless you were a contrarian, like me, but not, I am sorry to say, like you.) Those who participated thought they were as smart as Hewlitt-Packard, not complicit.

The fact that "They thought they were as smart as Hewlett Packard is exactly what makes them complicit. They were wrong and that error across the entire economy created the problem. If most people had acted like you, then no crash.

Not to beat a dead horse, Bruce, but complicity implies a wrongful act. There is nothing intrinsically wrongful about debt, or leverage. Of course, everything goes to hell if you base an economy on it. But all of our betters told us it was OK. Take Angelo Mozilo, for example, cofounder of Countrywide. He made hundreds of millions, was acclaimed a financial genius and later paid a fine of tens of millions but did not have to admit wrongdoing. So in the eyes of the law, the complicity was in a not very wrongful act. By your reckoning, most of us were like him.

Interesting article in the NYT today by a neuroscientist/former stock broker who claims that economic bubbles are caused not primarily by greed but investors response to risk. When the economy looks very stable investors tend to become too fearless and make bad, too optimistic choices. When it looks volatile, investors retrench. And there is a correlation beween this behavior and the levels of cortisol in the body. The author has some research to back up his claim about the levels of cortisol and risk taking.

This implies that when the Fed tells the world what it is going to do, that increases the stability of the market and produces too much exhuberance (unfounded optimism). Yes, this is counter-intuitivre -- the expectation of constant stability is not a good thing for the markee.

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About the Author

David Cloutier is associate professor of theology at Mount St. Mary’s University and editor of catholicmoraltheology.com. He is the author of Love, Reason, and God's Story: An Introduction to Catholic Sexual Ethics (2008) and is working on a book on the moral problem of luxury in contemporary economic ethics.